August 2, 2007

Raoul Wallenberg’s Unexplored Intelligence Connections In Hungary

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To fully untangle the complex relationships between the diverse factions of the Hungarian underground and Allied intelligence during the last months of World War II will take years of research. But new information is emerging daily and with it have come details which offer important opportunities in the ongoing investigation of the fate of Swedish diplomat Raoul Wallenberg. Wallenberg disappeared in the Soviet Union in January 1945, after having helped to protect thousands Jews of Budapest from Nazi persecution. Soviet era claims that Wallenberg had died of a heart attack in a Moscow prison in July1947 or that he was executed have never been fully substantiated.

Wallenberg’s links to American intelligence have received considerable scrutiny, as have – to a lesser degree – possible British ties. Next to (Western) Allied intelligence activities, the Hungarian resistance groups, the Jewish underground and German counterintelligence, Soviet intelligence operations in Hungary – and even more importantly, Soviet interpretation of the collected information – are of special significance. Yet on this subject, very little information has emerged from Russian archives.

As they advanced through Eastern Europe, the Russians were probing and infiltrating various local intelligence networks. The Soviet leadership was particularly paranoid about what it perceived as a possible Anglo-American conspiracy against Soviet interests. Stalin was apparently convinced that once Nazi Germany was defeated, the Western Allies would turn on the Soviet Union as their next target. A very fragile Soviet – British/ U.S. intelligence sharing agreement was in force towards the end of the war. But mistrust ran deep on both sides and by the autumn of 1943 MI6 formed a special unit aimed at gathering information about Soviet activities.

By the nature of his job, Raoul Wallenberg had ties to all the major actors in Hungary, including Russian intelligence. The Russian connection was clearly indirect: He is known to have been the object of close Soviet intelligence surveillance, through Mikhail Kutusov-Tolstoy, the chief NKGB agent in Hungary, who worked with the Swedish Red Cross. As Hungarian historian Istvan Gazsi has shown, some of Raoul Wallenberg’s closest aides – like Captain Elek Kelecsenyi – had ties to Soviet agents. Undoubtedly others like him provided key information about Wallenberg’s organization and his work. The Soviets later were not kind to these men, and Kelecsenyi suffered greatly as a result of his ties to Raoul Wallenberg.

Hungarian resistance groups were quite active since 1942, after the U.S. had joined the war, and especially after March 1944, when Germany occupied Hungary: There was the Hungarian Front (centered around the Hungarian Regent Miklos Horthy and other aristocrats like Count Istvan Bethlen); groups closely aligned with the Hungarian Front, most notably the MFM headed by Dr. Domokos Szent-Ivanyi and prominent Protestant Minister, Geza Soos, who held a post in the Hungarian Foreign Ministry; the Hungarian Boy Scouts, with far reaching connections; an active Communist underground; various Jewish resistance groups; and a highly efficient Polish underground network.

A group of Dutch and British officers, who had escaped from German prisoner-of-war camps, and who loosely banded together to fight the Nazi occupation, played an important role. The Dutch officers had close connections to the Swedish Legation from where they received a small monthly stipend (as prisoners of war).

The group around Admiral Horthy had well known contacts to British intelligence, the most prominent of which was Lt. Col. Charles Howie (MI9). According to Hungarian historian Karoly Kapronczay, in August 1944, Horthy’s men made plans to form an ”International Police Force”, ”composed of Allied soldiers and prisoners-of-war then living in Hungary.” In the event that the Western Allies had succeeded in the liberation of Hungary, Kapronczay writes, its intended purpose was to have been to help the Hungarian Army maintain order, with the goal of securing Allied interests after the Soviet occupation. Its members included Lt. Col. Howie, Warrant Officer Reginald Barratt and Captain Rex Reynolds on the British side and First Lt. Edward van Hootegem and Lt. Gerit van der Waals on the Dutch. Hungary’s support for the Western Allies came as no surprise. As renowned historian Krisztian Ungvary has explained, a large segment of the Hungarian middle class greatly admired the British political system. However, this project alone must have stirred Soviet anxieties.

Van der Waals and others maintained ties to all branches of the resistance. Through a member of the MFM, Peter Zerkowitz, the group around van der Waals established contact with one the most important British networks operating in Hungary during the war. As outlined in a recent book (”Sword of the Turul, by Catherine Schandl [Lulu Press, 2005]) and a new, although somewhat flawed documentary (”Code Name ‘Achilles’”, by Hungarian historian Laszlo Ritter), the group, under the authority of MI6 (ISLD), had been formed in 1942 and was headed by a Polish exile and associate of British intelligence, Jerzy Waciorski (”Achilles”) His main contact was Gabor Haraszty (”Albert”) who was trained by British Intelligence (MI9,in Egypt). The central focus of the group was protection and rescue of Jews as well as Allied service personnel which found itself stranded in enemy territory. But activities also focused on the procurement of political and military/strategic intelligence, such as the location of oil refineries and airfields. Several trained SOE agents worked closely with this group.

Remarkably, as American Wallenberg expert Susan Mesinai was first to note, three men associated with the Haraszty/Waciorski group – Karoly Schandl (a prominent lawyer whose father was the president of Hangya), Laszlo Pap (a Hungarian Army officer) and Louis (Tibor) Klement (an SOE agent and short wave radio operator) – ended up as highly secret prisoners in Vladimir prison, Russia’s most important isolator facility. In 1950, Schandl, Klement and Pap were sentenced to lengthy prison terms as British spies. Gerit van der Waals, Gabor Haraszty and Reginald Barratt too were arrested but died in captivity.

The fact that three Hungarians who had worked in the resistance and who had had ties to Raoul Wallenberg ended up as some of the most secret prisoners in Soviet captivity – out of millions of men – raises important questions. Schandl, Pap and Klement were not simply isolated, they were assigned numbers and were held in such severe isolation in Vladimir that not even the guards knew their real identity. Susan Mesinai has discovered that the chronological numbering of prisoners in Vladimir includes obvious gaps, especially for the time from July 1947- May 1948. The question persists if Raoul Wallenberg could also have become such a secret prisoner. Despite repeated requests the Russians so far have failed to account for the identity of all individuals to whom numbers were assigned.

In the only available Soviet interrogation record for van der Waals, he stated that he had been involved in the manufacturing and distribution of falsified (protection) papers and that in the course of this work he had met Raoul Wallenberg. Karoly Schandl made the point more explicity after the war, in his private memoir and in a statement to Swedish officials in 1958: He said he knew that the Dutch officers had received funds for rescue work from the Swedish Legation (presumably from Wallenberg’s organization) and that van der Waals had worked for Raoul Wallenberg.

Another Wallenberg expert, Dr. Vadim Birstein, has pointed out, that Reginald Barratt gave a potentially significant statement to a fellow prisoner about the Soviets’ keen interest in Wallenberg. He said ”the Russians arrested Raoul Wallenberg because they wanted to find out details of the negotiations he conducted with the British regarding the capitulation of Hungary at an earlier stage.”This quote appeared in an article in Dagens Nyheter on June 7, 1947. (The DN article containing Barratt’s comment was later cited in a key 1952 Soviet Foreign Ministry document which discussed possible reasons for Wallenberg’s arrest.)

Members of the Wallenberg family – notably Marcus Wallenberg – and their associates had indeed been involved in clandestine talks between Britain and Hungary in 1942/43. As Birstein notes, one of the key figures in these separate peace discussions, Dr. Ullein Reviczky, (subsequently the Hungarian Minister in Stockholm) appears on the list of invited guests at one of Raoul Wallenberg’s cocktail parties in December 1943. Swedish Intelligence expert Craig McKAy has established that in 1943, before traveling to Hungary, Raoul Wallenberg also had contact to the head of MI6 in Stockholm, Cyril Cheshire.

There are strong indications that Soviet interest in all of these prisoners had less to do with their particular activities. Instead, they apparently mattered far more as representative pieces of the larger power game that each one of these individuals represented. The three surviving Hungarians may have been intended to be used as witnesses in planned show trials in Hungary, which were abandoned after Stalin’s death in 1953. According to Birstein, the MGB official who had headed their investigation (as well as that of Raoul Wallenberg), Sergei N. Kartashov, had gone to Hungary as a Soviet liaison officer, in preparation for the 1948 Rajk trial. Equally interesting for the Wallenberg case is the fact that a former Hungarian AVO/AVH official and defector, Karoly Remenyi, testified in 1984 that he had been put in charge of preparing a similar show trial in 1953, aimed at exposing a supposed Hungarian Jewish-Anglo-American, anti-Soviet conspiracy. According to Remenyi, Raoul Wallenberg’s contacts and possibly his information were to have played a prominent role at the trial.

In the official account of his experience (cited in ”Sword of the Turul”) Karoly Schandl never acknowledged direct contact with Raoul Wallenberg. He did say privately, however, that his good friend Gabor Haraszty repeatedly met Raoul Wallenberg at secret underground meetings in Schandl’s apartment at the family villa which was located in close proximity to the Swedish Legation. Karoly Schandl had agreed to hide in his house a British SOE officer by the name of Andrew Daniels (Durovecz) whom the Achilles network had managed to free from Zugliget prison in November 1944. According to Schandl’s parents, in early 1945 Raoul Wallenberg came to the house to look for Karoly, who had already been arrested. During this visit, he also met with Daniels.

The documentary ”Codename ‘Achilles”, about the network around Schandl paints an interesting although clearly incomplete picture. Jerzy Waciorski claims that his group maintained important contacts, including to citizens of neutral countries like Switzerland, but offers few details. In interviews made in connection with the documentary, Waciorski says he had connections with Tibor Eckhardt, the leader-in-exile of the Hungarian Independent Smallholders Party and one of the key U.S. government contacts regarding Hungary during the war. From Eckhardt’s personal papers – published recently by U.S. historian Katalin Kadar Lynn – it has emerged that he had close ties to a U.S. military officer called John Grombach who headed a little known and highly secret U.S. intelligence organization called ”The Pond”. It operated completely separately from the wartime OSS (Office of Strategic Services, the precursor of the CIA). Formed in 1942, its existence was known to only a few high level officials around President Roosevelt, and it reported only to a select group of individuals in the U.S. War and State Departments. It will have to be examined what contacts and connections the ”Pond” had in Sweden and in Hungary and if Raoul Wallenberg’s mission had any direct or indirect ties with its operation. The ”Pond” collection remains classified in the CIA.

According to former CIA analyst Mark Stout who had a chance to review the material, one of the main supporters of ”Pond” operations was the Dutch firm Philips. Stout notes that Philips had a wide network of associated firms, including in Hungary. Philips owned a considerable stake of the well known Hungarian electronics firm Tungsram (whose subsidiary, Svenska Orion, was located in Sweden) from whose managerial ranks Raoul Wallenberg drew most of the key individuals on his personal staff. It is also worthy of mention that shortly after his arrival in Budapest, Colonel Howie was introduced to the Director of Philips Radio in the Balkans – by Gerit Van der Waals.

Notably, Tibor Eckhart was known to be close to Count Istvan Bethlen, who died in Soviet captivity in October 1946. According to Mesinai, Soviet interrogation records show that in 1945 Bethlen was questioned by the same interrogator and on the same day as Raoul Wallenberg. OSS contacts and the Swedish Legation had aided him once he had gone underground. All of this would have of course further fueled Soviet paranoia. At issue was the future of Hungary and men like Bethlen, openly pro-Allied and anti-Soviet, were regarded as a major threat to keep Hungary in the Soviet sphere of interests.

Also important is Raoul Wallenberg’s known association with MFM leader Geza Soos. Through the Swedish Legation, Budapest, the MFM stood in direct contact with Swedish Intelligence, which in turn worked closely with its British and U.S. counterparts in Stockholm. In September 1944, a Swedish Intelligence officer – Thorsten Akrell who met Raoul Wallenberg in Budapest – smuggled a radio receiver into Budapest through the Legation’s diplomatic pouch facility for use by the resistance. According to a Hungarian witness, the Soos group actively collected information on wartime atrocities committed by both German and Soviet troops and attempted to pass this and other strategic information on to the Allies. As the documentary ”Code Name Achilles” makes clear, the Hungarian resistance did not only possess access to a well functioning courier network, but also had the capability to produce microfilms. Soos and a few of his associates managed to flee to Italy in December 1944. The Soos party was debriefed in detail by British and American officials. The Soviets were fully apprised of MFM activities and received at least summaries of some of the information Soos provided. Newly released documentation from U.S. Archives indicates that the collected information was extremely valuable and much more so than has been previously acknowledged, especially for postwar consideration.

In his other private writings Karoly Schandl said that his interrogators had accused him of having had contact with ”a big American spy”. (Schandl says he knew the accusation to be incorrect.) The chance that the man under suspicion was Raoul Wallenberg is quite high. (It is known that Soviet officials suspected him of working for Allied and/or German Intelligence.)

Numerous witnesses have testified that the Soviets were obsessed with Raoul Wallenberg and his network of contacts. Many of his close associates – including Karoly Szabo, Pal Szalai and Gabor Alapi – were rounded up and harassed years after he disappeared and dozens served long sentences in Hungarian prisons.

The Soviets clearly saw Raoul Wallenberg’s significance as part of the wider political game, by virtue of his contacts but also due in part to his last name. (The Wallenbergs are an old, influential banking family in Sweden) Former Swedish Foreign Office archivist Göran Rydeberg has pointed out that the Soviets had information about the Wallenberg family’s involvement in private discussions with German officials about possibly escalating the war against Nazi Germany to a one-front war against the Soviet Union. Raoul Wallenberg’s plans for a post war organization dedicated to the reconstruction of Hungary and settling of Jewish property claims would have further enhanced Soviet suspicions. Protracted negotiations with Sweden over lost business in the Baltic countries and Eastern Europe as a result of the war were also looming. (Some of these claims involving Wallenberg companies were not settled until the 1950′s and some have lingered into recent years).

Aside from the Soviet’s possible wish to use Raoul Wallenberg as a means to extract important concessions from Western powers after the war, the fate of the ‘Achilles’ network offers an interesting subset of clues and, with it, points the way to new avenues of research.

Prior to the Soviet occupation of Budapest, individuals associated with the network around ‘Achilles’ received instructions – apparently directly from London – to report to Soviet authorities. (In line with the existing intelligence sharing agreement, Britain also sent the Russians a list with the names of its officers operating in Hungary). Most of the men did not fare well: As mentioned earlier, Gabor Haraszty and Reginald Barratt were killed in Soviet captivity while still in Hungary. British officials – although fully apprised of their location – did nothing to come to their aid. Van der Waals was detained together with Karoly Schandl when they met with Russian representatives at a pre-arranged meeting place. Schandl was to have been forwarded to the newly-formed anti-Nazi Hungarian government, Van der Waals to the British Intelligence Services.

Gerit van der Waals died in Moscow in 1948 (the cause of death remains not entirely clear). As mentioned earlier, Laszlo Pap and Louis Klement spent twelve years in captivity. Schandl’s imprisonment lasted for 11 years and 10 months. The group’s leader, Jerzy Waciorski, somehow escaped a similar fate. Like Waciorski, Andrew Durovecz was detained briefly by Soviet forces but was released almost immediately. Durovecz later admitted his pro-Stalinist views and membership in the Communist party.

Were the men around ‘Achilles’ betrayed, in Britain or in Hungary? The account Waciorski provides in the new documentary film raises as many questions as it answers. He claims he was so suspicious of the Russians that, unlike Haraszty, he would not have followed British orders to contact Soviet officials. (Waciorski says he personally did not receive such an order and tried to warn Haraszty not to comply) Waciorski claims that when he finally ran into a Russian patrol and had to wait to be processed, he fell asleep and when he awoke, he found himself alone. Only Soviet records can shed light on the full circumstances.

According to Karoly Schand’s memoirs, immediately after his release in 1956, he complained sharply to the British Foreign Office for its lack of activism on behalf of the men who had served the British cause in Hungary. Schandl says he was met with both fear and open hostility. He received no explanation of British behavior. (It is important to note that at the time of Schandl’s protest, Kim Philby was still very much in place. He was exposed as a Soviet mole only in 1963. Philby is known to have had longstanding interests in Hungary. In 1934 he had worked in the Communist underground in Austria as a messenger for Gabor Peter, who in 1945 became the Chief of the Hungarian Security Police. Also, the Soviet agent who recruited Philby – Theodor Maly – was a native Hungarian). It not known what precisely Schandl reported to British officials and if he leveled any specific accusations.

Jerzy Waciorski (who today goes by the name of George Deverell) returned to Britain in 1945 where he still lives today. It is unclear what Waciorski told British officials about his experiences in Hungary.

In addition to a more in-depth review of British records, there is an urgent need to see Soviet interrogation records from Hungarian prisoners as well as intelligence reports from Soviet agents and informers active in Hungary at the time. No such operational material was made available to the Swedish-Russian Working Group during its ten year investigation of the fate of Raoul Wallenberg. (1991-2001)

For his part, Raoul Wallenberg too may have learned a lot of sensitive information in prison, including the precise areas of interests of Soviet intelligence, but also perhaps information about Soviet sympathizers and agents. Some of these agents may have remained active after the war. It is equally likely that Wallenberg, had he been released, would have tried – like Karoly Schandl – to come to the aid of those with whom he worked and who had disappeared without a trace.